For example, to calculate compounding over a 10-year period, you'd take 1.08 and raise it to the 10th power. That yields 2.159. Finally, multiply the result by the lump sum.

You can calculate the sum-of-the-years' digits by adding up each of the years of an asset's useful life. You would add up 6 + 5 + 4 + 3 + 2 + 1 = 21 if an asset had a useful life of six years.